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Won Leads Asian Currencies Higher on Growth, Fed Rates Outlook

In South Korea, the won rallied to 1029.96 on April 30, the strongest level since August 2008, after the nation’s current-account surplus reached $7.35 billion in March. Photographer: SeongJoon Cho/Bloomberg

May 3 (Bloomberg) -- Asian currencies completed a weekly
gain, led by the won’s advance to a five-year high, as data
signaled a continued recovery in the region’s economies and on
bets U.S. borrowing costs will remain low.

South Korea reported its March current-account surplus was
the biggest in five months, Taiwan’s gross domestic product
growth beat forecasts and China’s manufacturing rose in April
from the previous month, figures showed this week. The Federal
Reserve said April 30 it’s likely to keep the benchmark U.S.
interest rate close to zero for a “considerable time” after
its stimulus program ends, and a separate report showed the
world’s largest economy barely expanded last quarter.

“The market’s in a bit of a sweet spot where the data’s
good but not good enough to really elicit an aggressive move
higher in U.S. interest rates,” said Jonathan Cavenagh, a
currency strategist at Westpac Banking Corp. in Singapore.
“Better data has been a secondary factor, although that’s
probably played out more for markets like South Korea.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the
region’s 10 most-active currencies excluding the yen, climbed
0.2 percent from April 25 to 115.35 yesterday. South Korea’s won
strengthened 1.1 percent to 1,030.33 per dollar, according to
data compiled by Bloomberg. India’s rupee gained 0.8 percent to
60.1625 and Taiwan’s dollar appreciated 0.4 percent to
NT$30.212.

Most Asian markets were shut on May 1 for May Day. South
Korea’s financial markets will be shut on May 5 and 6 for local
holidays.

U.S. Outlook

U.S. growth “has picked up recently” and policy makers
will keep reducing the pace of bond purchases, the Federal Open
Market Committee said in Washington after its April 29-30
meeting. The Fed pared its monthly asset buying to $45 billion.

The U.S. economy grew at a 0.1 percent annualized rate in
the first quarter, below the median estimate of economists for a
1.2 percent gain and the 2.6 percent expansion recorded in the
previous three months, according to an April 30 report. American
employers added 288,000 jobs last month, compared with a revised
203,000 new positions in March, according to data released
yesterday.

In South Korea, the won rallied to 1029.96 on April 30, the
strongest level since August 2008, after the nation’s current-account surplus reached $7.35 billion in March.

The nation’s trade excess widened to $4.46 billion in
April, a May 1 report showed, exceeding the median estimate of
economists for a $4.3 billion surplus. The government is closely
watching the effect of the won’s rise on overseas shipments, the
trade ministry said in a statement on May 1.

China Manufacturing

Taiwan’s economy expanded 3.04 percent in the first quarter
from a year earlier, official data showed this week, compared
with the 3 percent median forecast in a Bloomberg survey.

The yuan fell 0.1 percent from April 25 to 6.2593 on April
30. China’s manufacturing Purchasing Managers’ Index was 50.4
last month, compared with a reading of 50.3 in March and the
50.5 median estimate of analysts in a Bloomberg survey, a May 1
report showed. A level above 50 signals expansion.

A PMI of China’s factory output from HSBC Holdings Plc had
contracted for a fourth month in April, according to a
preliminary reading on April 23, prompting concern that economic
growth was slowing sharply.

“We’ve had slightly better data out of Asia,” said Callum
Henderson, Standard Chartered Plc’s global head of foreign-exchange research in Singapore. “The China manufacturing PMI
was better month-on-month albeit modestly. Clearly talk of a
hard landing is overdone.”